GREELEY, Colo. — The Pilgrim’s Pride Corp.’s pending acquisition of GNP Co., St. Cloud, Minnesota, accomplishes two goals. It gives Pilgrim’s Pride a beachhead in the upper Midwest region of the United States and it adds to its portfolio of poultry products that are certified organic and sourced from birds raised humanely.
The transaction, announced Nov. 29, is all cash and valued at $350 million. In a conference call on Nov. 30, Pilgrim’s Pride management outlined how the addition of GNP will benefit the company.
|Bill Lovette, CEO of Pilgrim's Pride|
“GNP’s strong portfolio of innovative brands tied to leading consumer trends will immediately improve and add to our growing line of products catered to the evolving food conscious consumer,” said Bill Lovette, CEO of Pilgrim’s Pride.
The acquisition also will quicken the pace with which Pilgrim’s Pride achieves its announced goal of sourcing 25 percent of its raw materials from antibiotic-free birds by the end of 2019.
“… some time just after the first quarter of 2017, we are going to be 24 percent of our production utilizing no antibiotics ever,” Lovette said. “That includes the organic production that will be coming on by the end of first quarter and being organic also includes being antibiotic-free as well. And with the addition of GNP during the first quarter, that adds about 3 percent for that total of 24 percent. So without GNP, it would be 21 percent for the legacy Pilgrim's operations.”
|Fabio Sandri, CFO of Pilgrim's Pride|
Fabio Sandri, CFO of Pilgrim’s Pride, estimated that the company will achieve annual synergies of approximately $20 million in the areas of optimized production and distribution, cost savings in purchasing, production and logistics.
Lovette added that Pilgrim’s Pride will have an opportunity to learn from many of the strategies GNP has employed to differentiate itself in the marketplace.
“They, for example, in the Just Bare brand, a consumer can scan a package and trace it back to the specific family farm on which that chicken was raised,” he said. “That is one enhancement.
“… Those individual trays are net weight, so they’re not catch-weight trays, which adds value to both the retailer and the consumer. They are also the leading chicken brand sold on Amazon. So it is an omni-channel company, which again, we believe it further enhances our total portfolio.”
On the marketing side, Lovette sees opportunities to bring scale to some of GNP’s regional brands.
“…Our strategy has been more toward supporting our customers’ brands, especially at retail,” he said. “We believe that there’s a possibility that Just Bare brand is extendable and could become our national go-to-market brand at retail, given its consumer-leading attributes and on-trend messaging. We are very excited about the Just BARE brand and it is scalability across the nation.”
GNP has processing plants in Gold Spring and Luverne, Minnesota, and the company employs approximately 1,700. The transaction is expected to close during the first quarter of 2017.